Opinion: Editorials

Editorial: Google should go beyond P.R.

Dignitaries take part in a ground-breaking ceremony for the new Google campus in Boulder last August. (Mark Leffingwell / Staff Photographer)

Alphabet Inc., the new corporate name for what used to be Google Inc., reported revenue of $18.7 billion in the third quarter of 2015, up 13 percent from $16.5 billion in the same period the year before. About $4 billion of that was profit, which was up 45 percent from 2014.

For the first nine months of 2015, those numbers were $53.7 billion in revenue and $11.4 billion in profit. Profitability for the first three quarters of the year was up 21 percent from the same period in 2014.

With profits now piling up at a rate of more than $1 billion a month, it should come as no surprise that Google stock soared from a close of $524.81 per share on Jan. 2, 2015, to $758.88 on Dec. 31, a return of 44.6 percent in a year in which the S&P 500 was down about 1 percent.

As a result, Forbes listed the company's co-founders, whose fortunes are tied up largely in company stock, as the 10th and 11th richest people in the U.S. The magazine estimated CEO Larry Page's net worth at $33.3 billion and company president Sergey Brin's at $32.6 billion.

So we will grant that Google probably could have found a more lucrative use for the $41.7 million it invested earlier this month in tax-exempt bonds issued by the state of Colorado to support renovation of about 200 units of affordable housing in Boulder. Terms weren't disclosed, but as any Boulder retiree could tell you, bonds not of the junk variety issued since the financial crisis of 2008-09 have paid generally paltry dividends.

We will also point out that the sum invested could probably be found under the sofa cushions of the Google co-founders. Further, we will point out that while this was trumpeted by the very impressive Google P.R. machine as an investment in Boulder affordable housing, it was in fact an investment in Colorado tax-exempt bonds that will pay back Google's investment in full, plus whatever tax-exempt dividend the coupon offers. And we will point out that while this bond issue will go mostly to improve the energy efficiency of the 200 units, it will not add significantly, if at all, to the affordable housing stock, which is Boulder's principal need.

The brass band that accompanied this bond purchase was quickly followed by Google's announcement of a $250,000 donation to the Museum of Boulder for "a maker space." Clearly, the company is on a major public relations offensive to craft a positive image as it expands its Boulder operation. We would like to see this P.R. offensive matched by substantive contributions to offset the likely impacts of that expansion.

A couple of weeks prior to the bond purchase, a developer confirmed he was moving ahead with plans for high-end townhomes at Boulder Junction aimed largely at Google employees arriving in town. Assuming the units rent for something in the neighborhood of $2.50 a square foot, a 2,000-square foot townhome would go for $5,000 a month.

"I could pre-lease it just to Google people," developer Jason Lewiston said of the 28-unit development.

This is a phenomenon well-known to San Franciscans, where housing prices have skyrocketed as highly-paid Silicon Valley tech workers, many on the Google payroll, have moved in, forcing out longtime residents who could not keep up with soaring rents.

Boulder already has one of the nation's highest percentages of cost-burdened renters — those paying more than 30 percent of their income on rent — with the average rent approaching $2,000 a month. Upward price pressure brought on by the entry of a larger Google workforce will only exacerbate that trend.

So we'd like to see Google do more than buy bonds somebody else would have bought otherwise, assuming they offer a competitive yield. We'd like to see Google make a major investment not in bonds but in new housing itself — specifically smaller, moderately-priced units designed to offset the inflationary effects of high-end housing aimed at its workers.

There is an undercurrent of resentment among Boulderites who think Google's expansion here will be a net negative because of its likely effect on housing prices, already the highest along the Front Range. Many Boulder renters live in fear that inexorable inflation of housing costs will force them from their homes as more affluent tech workers line up to move in.

Google has the resources to make a real difference on the low end as well as the high end. The question is whether it has the will to do so.

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